Australia’s first social procurement policy redefines value for money

The Victorian government is rethinking value for money in procurement as a more expansive concept, which includes the value of affirmative action for disadvantaged groups and social returns from its billions in annual spending.

Under the new Social Procurement Framework, which will take effect on September 1, public servants will be required to use “a balanced judgement of a range of financial and non-financial factors” in assessing value for money.

The new approach combines the intentions of multiple similar policies that aim to direct spending towards more narrowly defined social outcomes, like the federal government’s Indigenous Procurement Policy.

There will be few exceptions in the Victorian public sector. Agencies not subject to the standing directions on procurement are “encouraged” to adopt the new framework nonetheless.

The policy is the first of its kind, according to a joint statement from Minister for Industry and Employment Ben Carroll and Minister for Finance Robin Scott:

“The whole-of-government approach to social procurement is an Australian first and will apply to purchases of all goods, services and construction by departments and agencies.

“The framework will mean businesses who use social and disability enterprises or Aboriginal businesses in their tenders for government contracts will have a competitive edge over those who don’t.”

Other intended beneficiary groups include long-term jobseekers, at-risk women, victims and survivors of family violence, single parents, migrants and refugees, “disengaged youth” and workers in transition.

“Purchasing from suppliers that comply with industrial relations laws and promote secure employment” is also encouraged.

The goal is also to give social enterprises greater access to the billions of dollars the state government spends each year. “This framework is a demonstration of our ambition to support and super-charge the sector’s growth,” Carroll explained in a foreword to the new strategy document.

Supporting guidance for Victorian public servants will come from the Department of Treasury and Finance and Department of Economic Development, Jobs, Transport, and Resources.

In 2016-17, the state government spent about $16 billion on goods and services. Infrastructure costs were about $9.1 billion and are expected to average slightly more than that over the following four financial years. The two ministers claim the state government has previously achieved “social and sustainable outcomes” through procurement for infrastructure projects such as Level Crossing Removals, the Metro Tunnel, and the Westgate Tunnel.